Microsoft Surface: What it tells us about devices, services and the future of Microsoft

Microsoft Surface: What it tells us about devices, services and the future of Microsoft

Summary: What does the second generation Surface say about Microsoft's transition to devices and services? More than you might expect.

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Sat a couple of rows back at the second generation Surface launch in New York earlier this week, I found myself watching for a unifying theme that would bring Microsoft's hardware and its services together.

It didn't take long for it to arrive, as Surface VP Panos Panay quickly showed the device at the heart of a web of services, all held together with Windows and with software.

In this version of the One Microsoft story, software isn't just apps, though apps are part of the story. It's everything from HTML/JavaScript code rendered in a browser, to the sync service at the heart of SkyDrive, to Outlook and your mail in Office 365, to mobile apps on an Android phone getting push notifications via Azure. It's a distributed world of services all with common APIs, all glued together with code.

But that's not quite the right way of looking at it: it's focusing on the old Microsoft at the heart of the new, the platform company, not the devices and services business. Steve Ballmer is reported to have told Microsoft employees at his final company meeting that continuing to think of Microsoft as a platform company was the wrong way to look at things, that devices and services meant a very different way of doing business.

The Surface Remix Project is a prime example of how Microsoft is bringing all the elements together. The 1092 pressure-sensitive touch sensors that underpin the new Touch Cover are one element, pure hardware. The Xbox Music service is another, content hosted in the cloud. The app that puts it all together couldn't work without the device or the services. You couldn't take advantage of the sensor API without hardware, and you couldn't remix that music without a service to provide the sources.

At its heart, Microsoft's devices and services model is very much a software model. But as we move to a ubiquitous computing world you can't deliver software without hardware, and you can't use software without services. That means that Microsoft has to change, shifting from its traditional platform model — and from its Windows-centric way of looking at the world.

Of course, that doesn't mean that Windows goes away. It's being redesigned for the devices and services world, and much of that model is built into Windows 8's WinRT development model.

Even so, Windows is still an open platform, and while new security models mean increased isolation between apps, with tightly enforced sandboxes, new operating system features such as contracts make it easier for users to build their own personal workflows across the Start screen and their Windows Store apps. That user-centric approach is key to any services model, and at the heart of any model that focuses on devices.

That new way of looking at the world is reflected in Surface. At first glance it's just another instantiation of the Windows platform, such as Windows Phone and Azure — and just like the original Surface tables before it.

But drill down a little further, and it's clear that where in the past Microsoft would have tuned its hardware for its software, with Surface it's tuned it for services. That tuning makes Surface just a surface, where both local Windows and cloud services are rendered. It's just one screen in those "three screens plus cloud" that Microsoft talked about a few years back, albeit a highly-optimised screen (and with some of the additional hardware announced in New York it can move to being any one of those three screens).

We're in the middle of generational shift in the way we deliver software. I'm writing this piece on a first generation Surface Pro in a coffee shop in Seattle, and it's being stored in a cloud storage service as I type — smeared around the world in geographically redundant storage fabrics. Those words will soon be copied into ZDNet's content management system before being rendered in whatever browser you're using. It's all services.

Those services mean that I don't need to know anything about what device you're using, or how you're connected to the internet. Open standards and open services are turning our personal devices into smart endpoints, and our applications and content are dynamically reformatted to fit on whatever device, whatever screen you're using.

Windows 8.1 is a key part of Microsoft's vision, as it expands on the programming model delivered in Windows 8 — especially around a key technology that's crucial to delivering a cross-device, cross-platform model: Portable Class Libraries.

While tomorrow's applications will need to run on everything from phones to tablets to servers, one user interface does not fit all. That's where PCLs come in, as they let you wrap common code into a library, ready for you to craft custom user experiences for the surface that renders the application.

PCLs are the heart of tomorrow's services, as they let service code and endpoints be anywhere — an approach similar to that being taken by Xamarin, with its model of using common code modules and device-specific user interfaces. If you're thinking about developing apps that work on Android and iOS, then that same approach starts to scale across all the iterations of Windows. And of course there's just one development environment, one source control, and above all, one project.

A devices and services world may seem to be just another iteration of the platform world we've grown accustomed to – but it's really something very different. It's functional, not siloed. It's cross platform, contextual, and open, able to deliver the right user interface to the right device at the right time for the right person.

This isn't an overnight revolution. Billions of lines of code don't go away in a flash, and aren't instantly replaced by something new and better. We're at the start of a ten, even twenty, year journey, one that's going to carry along the entire industry – Apple's devices and Google's services included.

Further reading

Topics: Steve Ballmer: The Exit Interview, Microsoft, Mobility, Storage, Tablets, Microsoft Surface

Simon Bisson

About Simon Bisson

Simon Bisson is a freelance technology journalist. He specialises in architecture and enterprise IT. He ran one of the UK's first national ISPs and moved to writing around the time of the collapse of the first dotcom boom. He still writes code.

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62 comments
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  • The Pro looks

    like a nice tablet....at about half the price they are charging. Sorry, but I'll just buy a light weight laptop...
    timspublic1@...
    • Hardware Prices

      I agree. I know Microsoft wants to maintain its lofty software margins as it moves into devices. When it looks at Apple it sees green (both of paper and 7 deady-sin). Although Apple charges a lot for their hardware, they don't charge much for their software. Microsoft is trying to do both and given its current market position in mobile, I don't think that's going to work.

      Right now Microsoft needs to grow its platform in the mobile spaces. If it's going to continue asking folks to pay $199 for Windows Pro and $399 for Office Pro, then I recommend they significantly reduce the price of their hardware. The Surface 2 Pro would fly off the shelves if all models were about $300 cheaper and all models had at least 128GB of storage and 8GB of RAM. At that price, they can then charge Applesque prices for the accessories and software.

      Bottom line: Until they grow their platform in mobile spaces, I don't think they can put their hands in our cookie jar twice. Consumers like value and they will only pay a premium if your product is perceived as premium. IMO Microsoft has never been perceived as a premium product. Microsoft won the dekstop war because you could buy cheap hardware, load Windows on it and have "good enough". Right now Android is taking the low road with extremely cheap hardware that offers value-oriented consumers "good enough". Microsoft, you need numbers to create gravity around your platform. For now, you need to think in terms of obscene value to lure consumers to your vision.
      robradina@...
      • Huh?

        Why do people keep giving the tip that Microsoft sells their tablets at a loss?
        Michael Alan Goff
        • Because it is good advice

          You have to sell products at a price that people are willing to pay. If people aren't willing to cover your costs, you give up . . . unless you have ulterior motives, which Microsoft does. They need to build the Windows tablet ecosystem. Overpricing Surface last year is a primary reason that the Windows tablet ecosystem has been slow to take off.

          If Microsoft wants to be a tablet player, they need market share, not margins. And if they have to break even on the devices or sell at a loss for a while to drive market share, that's what they need to do.
          FDanconia
          • No they need margins.

            Market share is a terrible metric and only the foolish use it.

            If you are not able to sell a product for a profit, then why be in business.

            The problem that MS faces is the last 15-20 has seen the PC hardware business a race the bottom. Many companies no longer make hardware because there is no money in it. The worlds largest manufacturer by volume, Lenovo, has net margins less than 2%.

            The end result is that PC consumers expect cheap hardware, and rarely value quality, such as the Surface.

            Lets say they forgo profit and sell these at the prices above. What happens next? Will they raise the price once they have "market share", will they continue to sell at cost and incur loses due to R&D?

            At what point do they start making money?
            yoshipod
          • Yes, raise prices later

            They tried for margins and took a $9 billion charge. Yes, I'm saying keep prices low to drive market share, which attracts app developers, which increases demand for the tablets. Once a lot of people want them, maybe by the Surface 3 time frame, you raise prices.

            The way they could have done this tactically was to perhaps keep list price at $499 for Surface RT, for example, but sell them at an "early adopter" discount of, say, 30% off. As demand picks up, you start reducing the discount.

            Look at Kindle. They are sold for cost or below cost, but they make it up on ads. That's another way to do the same thing. Not the classiest way, IMHO, but it's a way. And look at Kindle's market share.
            FDanconia
          • Great minds think alike.

            I guess I should have read further and I could have skipped my message
            apoteke
          • $9 B?

            I thought was 900M or about $1B.
            robradina@...
          • Kindle

            When the Kindle came out I believe that Amazon did not make money on it. The reason Wal-mart stopped carrying them is because they had built in processes to buy other stuff from Amazon. So they sell the device at a loss and make it up selling other stuff. Not saying right or wrong to do it this way but it is a business model.
            apoteke
          • Maybe they can put them in

            a bin at the counter at Best Buy and Staples. Tablets aren't impulse items. If they continue to make tablets they need both margin and market share.
            Orlbuckeye76
          • Sell at a loss to start the market demand

            I understand that Toyota sold the early Prius hybrid cars at a loss to get the market going and now hybrids are everywhere - so it can work when demand picks up.
            At the prices Microsoft is asking, I'd rather buy a top end laptop.
            JohnOfStony
          • Also -- Profit depends on volume...

            If you start out selling at a thin margin and the product is a hit, as volume builds you can fine tune the supply chain to regain some margin. Although Apple's prices have always had a nice margin, I believe I read their volume has allowed them to reduce their manufacturing costs as suppliers gained experience making their devices and some of the manufacturing processes were improved as they gained experience. (i.e. defect rates go down, cost of parts drops with greater volume, transportation costs can be streamlined with greater volume, etc.)
            robradina@...
        • @Michael

          Cause they think they know better how to run MICROSOFT..LOL!!!
          Koymik
        • Without seeing the MS insider cost figures, how can you know if it's a loss

          figure or just a lower profit margin. The other aspect is MS went for some fairly costly materials and that pushes the price up. They could have used cheaper materials for the cases and had a lower price, but made a decision to go costly, and to also charge a lot for the software they put on it - which costs them next to nothing to have there.
          Deadly Ernest
      • This is a silly argument

        My spouse got a 128 Gb Surface Pro to assist her in her work as a school teacher. It is now the rage device at her school simply because she needs NOTHING else to do ALL her work. Then my mother (84 this year) got one because she liked my spouse's Surface better than her iPad. Yes, the Surface cost significantly more than Android or Apple systems. They both learned to utilize them faster, they both have i5 processors, they both have 128 Gb of RAM and they are running Office Pro 2013 (and I get one year of free Xbox Live Gold in exchange). You are correct that the systems would fly off the shelf if they lowered the price but does it really make sense to do so when the system offers so much more. The Surface is quite simply the fastest, most reliable, easiest to use and most flexible tablet on the market. If BMW was to sell its 7-series sedans $300 cheaper than Chevrolet sells its Cruze for they would never be able to keep up with demand. That is NOT going to happen because BMW puts more into their product. Microsoft has built an awesome tablet and even allows other manufacturers to build hardware compatible with their software and vision. They have confidence and it is far too early to count them out. I will be the first to admit that I didn't find the RT version at all appealing, it is too much like all the other consumer tablets and phablets on the market. The Surface Pro, however, is a very distinct animal that is afar and away an entirely different experience that can justify its price point based on the fact that nothing else on earth can do the job it does. Is it perfect? No. But it has literally raised the bar for consumer and business hardware in this class and so far there is very little evidence that Apple, Google or any other are truly willing to compete one-on-one with the Surface Pro.
        The Heretic
        • Sure buddy sure.

          Do you happen to work for Microsoft? Btw, there's no one I know that would ever touch a Surface or Windows 8. /s
          Arm A. Geddon
          • Is that against your religion?

            " Btw, there's no one I know that would ever touch a Surface or Windows 8."

            Looks like religion or superstition. What if your friend would touch surface? Would his/her hands fall off? Would they be damned to burn in hell?
            paul2011
          • Geez!! Don't get your poopies in a knot.

            Do you not know what "/s" means? It's short for sarcasm.

            I get a kick out of those that say my cousins uncles nephew switched from "fill in blank" because "fill in blank" is sooooo much better because "fill in blank" is slow, buggy, etc. Oh and sucks noodles. Sorry but I don't believe these stories.
            Arm A. Geddon
          • Hardly the same...

            The OP indicated it was his wife and mother. So it's only direct personal hands-on experience that counts then? Kinda runs against the grain of....oh, I don't know...every major online retailer's user feedback programs. But maybe they're wrong and you're right. Could happen, I suppose. /s

            The fact is there was nothing truly objectionable in the OP's post...except that it didn't fit your bias.
            Nierteroth9
          • Pot meet Kettle!

            No more to say!
            martin_js